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HomeMy WebLinkAboutNovember 10, 1998 0 ü ¡ CITY of ANDOVER '\ J '-- ./ Economic Development Authority Meeting - Tuesday, November 10, 1998 Call to Order - 7:00 PM Discussion Items I. Discuss Proposal/Purchase Remaining Acreage/Andover Station! Asset Realty Advisors 2. Discuss Proposal/Purchase of Eight Acres for Rainbow Foods/Asset Realty Advisors 3. Discuss Veterinary Hospital Proposal/Anoka Area Veterinary Association 4. Review and Discuss Prospect List! Andover Station 5. Discuss and Establish Land Sale Price/Andover Station /-- ') \j 6. Discuss TIF Budget/Project Status/Andover Station 7. Other Business 8. Adjournment ( '\ \...-J 0 U / ~'ì CITY of ANDOVER .~ ANDOVER ECONOMIC DEVELOPMENT AUTHORITY MEETING NOVEMBER 10,1998 - MINUTES A Meeting of the Andover Economic Development Authority was called to order by Mayor Jack. McKcIvey on November 10, 1998, 7:00 p.m., at the Andover City Hall, 1685 Crosstown Boulevard NW, Andover, Minnesota. Present: Councilmembers Mike Knight, Ken Orttel; Resident members Bill Hupp and Robert Nowak Absent: Councilmembers Bonnie Dehn and John Kunza Also present: City Engineer, Scott Erickson Community Development Director, Dave Carlberg City Administrator, Richard Pursman Others U DISCUSS PROPOSALlPURCHASE REklAINING ACREAGE/ANDOVER STATION/ASSET REAL TYADVISORS Eric Gabelson, Asset Realty Advisors, addressed the EOA with a proposal to purchase the remaining 76 acres of Andover Station and develop it. They are an investment company of real estate based in the Twin Cities, working with all types of real estate. He provided background information on the firm itself and on the experience of the people within the firm. They propose purchasing and developing all of the remaining property in Andover Station in phases and in partnership with the City. Mr. Gabelson stated the City has a good basic plan. He felt a grocery store on the northwestern comer would solidify the site with the two anchors, as both would be a good draw. Once they have a development agreement outlining their purchase of the site, they would have engineering plans done of the site with a specific layout of the types of uses that would fit. They would market the property. They could either develop the grocery store site with a part of the agreement being their intent to purchase the remaining acreage of the site, or they would be willing to develop the grocery store site by itself if the EDA does not wish to proceed with their proposal to purchase the entire site. Their first phase would the development of the grocery store site on eight or nine acres on the northwest comer. The plan might change depending on the demand of certain users. Once they have a feel for that demand, the time frame to develop the entire parcel can be scheduled. They would market and develop the land, acting as a sales agent to the user, but working with the City to make /\ sure the user works for this development. They are currently working with Flemming Companies, V a food wholesaler, in other developments; and a Rainbow Foods store is being proposed for this site. They would have the capability of bringing in the users that don't traditionally own their own real estate. They also have the capability of putting in the equity andtìnancing to whatever the user would like to do. They could own and lease to tenants or facilitate the sale to those who want to own \ ~) ~-) ) Andover Economic Development Authority Meeting Minutes - November 10, 1998 Page 2 (Proposal/Purchase Remaining Acreage/Andover Station/Asset Realty Advisors, Continued) real estate. Asset Realty Advisors would be the point person but other brokers could be brought in. They would have to expose this development to the whole brokerage community. Councilmember Orttel noted that the intent of the City has been that the development would be more up-scale with more diverse users. They were also told by another consultant to stay away from big box users. Also, the City doesn't want fast-foot stores on every corner. Mr. Gabelson felt the grocery store would be the anchor to draw people to the smaller users that surround it. This type of mixed development will require some focus to draw people and to sustain it. They don't foresee any other large stores on that site. He felt the project could be more up-scale, but to make it successful, something like a grocery store will be needed as that draw. They don't have to put in fast tòod stores. The Authority questioned the addition of another food store so close to the other ones, especially the newly opened Rainbow in Coon Rapids. Mr. Gabelson stated the market study indicates the area will support that size of store. A certain amount of parking is needed, but creativity can be used when bringing in other tenants. , - / Councilmember Orttel \vondered what the price of the land would be for a phased sale to a developer; because as the phases arc completed, the remaining land becomes more valuable. Also, the City would be in competition with the commercial development across the road. Mr. Gabe1son stated a percentage increase could be spelled out in the development agreement. The entire project and what is being accomplished needs to be kept in mind. They could work with the City to detennine reasonable values for the land. They would also be spending a fair amount of money coordinating the development and in engineering plans. It wouldn't make sense for them to pay top dollar for the entire thing. They would be willing to consider a development schedule that is realistic. He believed the entire development would take three to five years. Councilmember Orttel worried about the control of the quality of the project if the City sells each parcel individually. The desire is to have continuity. By having one agent develop the parcel, it would be easier for the City to have control over the design. Mr. Hupp asked if the plan for Rainbow would be more up-scale. Mr. Gabelsol1 stated Rainbow has new concepts. The demographics show a lot of children. The grocery store is very interested in the project. Then it is usually not hard to get others interested because there is such a draw. The City can control what the building would look like. It comes down to what they have to pay for the land. If they have to put their money into the land, they do not have as much to spend on the building or landscaping. Councilmember Knight stated he would like to see something similar to Centennial Lakes. Mr. Gabelson stated they have some big boxes to draw. A strip mall doesn't have to look like a strip -\ mall, as accents and landscaping will change the look. He felt the area along Bunker Lake Boulevard - J will be good for retail because of the site line. Office and light industrial will work off the road. '\ '\ <_J "-) Andover Economic Development Authority Meeting ì Minutes - November 10, 1998 / Page 3 (Proposal/Purchase Remaining Acreage/Andover Station/Asset Realty Advisors, Continued) The discussion continued on ideas for the development of the park, Asset Realty Advisor's purchase of the Downtown Center, the success ofthe Downtown Center since it has been converted to a strip mall, the need for adequate parking without that large parking lot look, the possibility of shared parking areas, the suggestion that the City hire a traffic and parking expert to determine how many parking lots will be needed based in some assumed uses, the possibility that part of the pond may be lined to eliminate unwanted growth with the other part to remain in a natural state, Mr. Gabelson estimated retail tenants would pay between $7 to $15 per square foot. Office warehouse would be about $7 for the office and $3 to $3.50 for the warehouse plus operating and taxes. The Authority tended to favor the idea of having one organization market and develop the Park. They did not wish to make a decision at this time, however, and wanted to discuss the cost ofthe land for sale before making any commitment to Asset Realty Advisors. , -'- ) DISCUSS PROPOSAUPURCHASE OF EIGHT ACRES FOR RAINBOW FOODS/ASSET REALTY A})v1S0RS Eric Gabelson, Asset Realty Advisors, explained this proposal is separate from the previous proposal. They could do this project or both. He felt the grocery store is needed to make the development work. They would purchase the site, build the store and lease it to Flemming Companies for 20 years. Landscaping would be their responsibility. Conceptually the EDA was interested in the proposal. They again noted the intent is that this be an up-scale development. Mr. Erickson stated the site would be ready to meet the needs of their time frame for construction. No further decisions were made at this time. DISCUSS VETERINARY HOSPITAL PROPOSAVANOKA AREA VETERINARY ASSOCIATION Michael Cook and Daryl Hartman, Veterinarians, Anoka Area Veterinary Associates, P A, addressed the EDA regarding their proposal to construct an animal veterinary medical and surgical facility. It would serve as a control "Flagship" hospital for an expanding ring of out-patient clinics in the northern metropolitan region. The current satellite clinic in the Downtown Center would then be closed. They also gave a history of their organization. The veterinary industry in general has ') traditionally been a one- to three-person facility owning its own hospital. But with the rising J tedmology and equipment costs, it is more difficult for a veterinarian to operate a facility and a full- service hospital. Anoka County doesn't have a full-service facility. Their proposal of having satellite clinics and one central hospital is a new one. The intent is to service a number of different " ' " \. ) '--.) Andover Economic Development Authority Meeting '\ Minutes - November 10, 1998 "- ) J Page 4 (Veterinary Hospital Proposal/Anoka Area Veterinary Association, Continued) veterinarians and perhaps a number of different communities to distribute the costs of that technology and equipment. That reduces the cost to the individual clients and veterinarians as well. Dr. Cook explained the site selection criteria used to select this location for the hospital, the process they have gone through to hire an architectural firm that was familiar with the veterinary industry and their desire to keep the personal service for their clients using the Mayo Clinic effect by keeping the primary care person in charge all the way through. Their construction schedule would be to begin in May, 1999. Dr. Hartman also explained another phase would be the possible development of a pet hotel and dog training. The EDA suggested the doctors consider the site south of Commercial Boulevard because it will be more secluded and will have the outdoor amenities they desire, including the ponding areas. Mr. Cook agreed to look at the site with Mr. Carlberg. Mr. Cook stated price is important to them. Because of the size of the project, there is a risk of insufficient capital. They will incur about $100,000 in development fees before they get any financing, so there is a lot of risk for small operators. The cost to build the facility will be $143 to ) $166 per square foot, which is much higher than most construction because of the specialty items needed for this type of hospital such as air control, materials for the kennel areas, etc. They are looking at this as providing a service to the community. Part of the expense is to eliminate odor and for sounding proofing. They adhere to the standards for the disposal of carcasses. All exhaust is tìltered, so there should be no odor outside the facility. They have already contributed to Anoka County for many years. Their pay back to the community in tax dollars on a $1 million facility on less than an acre of land will be about $40,000 to $60,000 per year. He asked what the EDA is willing to contribute toward each parcel of development. In budgeting for this project, he factored in $0.85 per square foot for the purchase of the land. The EDA noted the concern is more than the price. They are concerned with the quality of the facade of the building. The intent of the development is to be up-scale. Dr. Hartman stated they hired an expert architect in hospital design. It will not just be a block building. They too want a quality project, and they would have no problem conforming to a theme for the area. No decision were made at this time. The doctors agreed to look at the parcel south of Commercial Boulevard. The EDA did discuss a price per acre to sell the land later in the meeting. The EDA recessed at this time, 9:15; reconvened at 9:26 p.m. \ ) C) U Andover Economic Development Authority Afeeling ì A1inutes - November 10, 1998 -.. / Page 5 LAND PRICE CONSIDERATIONS Mr. Fursman introduced Mike Mulrooney, an Andover resident, who is experienced in commercial development, financing projects, and the pricing of land. He also noted that the sooner Andover Station is developed, the more years the City will be able to collect the tax increment. With the theater opening in 1999, the City will be collecting the tax increment of about $72,000 a year for II years. The EDA asked Mr. Mulrooney what he thought of the proposals of Asset Realty Advisors and on the development of the Park in general. Mr. Mulrooney noted there is a difference between speculators and developers. It was his opinion that the City would be making a mistake to accept the proposal and advised that more research be done on land prices. He also suggested the City contact other commercial retail developers to see if there is an interest in developing the site. The City is in the path of progress, and he expected businesses and developers will be coming to it. As a resident, he is willing to assist in any way he can to help on this project. He agreed with the concept of working with a single developer to develop the Park. He didn't feel the Park should be developed in phases as proposed but as one large project. The theater is a good lead tenant for the area. He explained the development that has , evolved in Woodbury, noting they made the decision they did not want any fast food restaurants in ) their developments, only sit-down family oriented establishments. The City can dictate what will go into the Park. He liked the EDA's vision for an up-scale development, though he didn't think an up-scale grocery story \vill be îcasible on this side of town. He also disagreed with the price per square foot for reIail tenants which was given by Asset Realty Advisors this evening. He suggested the price to sell the land be discussed with some national or regional developers to get feed-back on prices. NIr. Mulrooney didn't think with a major developer that price is going to influence the quality of the development that much. A developer will help with the tenants; a speculator will not. Talk to other developers; talk with communities that have had experience with those developers. Another rcnson to team up with a large developer is to get the Park built as soon as possible. The sooner it is built, the longer the City will be capturing the tax increment. So a developer is needed that has the financial muscle to carry it through. The EDA directed Staff to work with Mr. Mulrooney to get a list of firms to contact about developing the Park, both regional and national. It was also suggested that Asset Realty Advisors be contacted and told the City is not going to make a commitment at this time until more research can be done. They also directed Staff to contact those on the prospect list and inform them a commitment cannot be made at this time because they do not want to jeopardize the entire project. It was noted, however, that many of the prospects may be good businesses for the light industrial or office warehouse area. Possibly a developer would want to develop just that portion of the park. The EDA did give conceptual agrcement to proceeding with the proposal of the Anoka Area Veterinary Association which was proposed this evening, as they felt that isolated sale would not impact the project. It was also suggested that a sale price for the land should be $1 per square foot. Mr. Carlberg stated he would show them the site discussed this evening on the south side of . Commercial Boulevard. (J U Andover Economic Development Authority Meeting l\1inutes - November 10, 1998 Page 6 BUNKER LAKE UPAlCONNEXUS SUBSTATION The EOA directed Staffto investigate costs to move a portion of the substation along Bunker Lake Boulevard and to acquire the land for commercial development. It was felt that cost may be recovered in the redevelopment of that corner. It was suggested that if the EDA would have to bond for those costs, consideration should be given to including the cost to acquire Anoka Auto Wrecking as well. OTHER BUSINESS CovenanT Not to Sue/Andover Station -.Mr. Fursman stated the City has received the final document on the Covenant Not to Sue relating to the sale of property in Andover Station. There were some minor language changes since the last approval, which the Attorney has reviewed. JIIlotioll by Orttel, Seconded by Hupp, to approve the amended Covenant Not to Sue. Motion carried on a 5-Yes, 2-Absent (Dehn, Kunza) vote. , ) City Business Article - Mr. Carlberg provided copies of a September 4, 1998, article in the City , / Business on the development of the land give away in Anoka's commercial park. .Motion by Knight, Seconded by Hupp, to adjourn. Motion carried on a 5- Yes, 2-Absent (Dehn, Kunza) vote. The meeting adjourned at 10:40 p.m. Respectfully submitted, ~~=--~ "- Marcella A. Peach Recording Secretary j r